No one has to tell investors it”™s tough out there, but it is particularly challenging time for senior citizens who may have lost nest eggs during the tumult of the Great Recession and are considering what wise ways may improve their investment strategy.
“It”™s a given everyone has to look at their situation and invest accordingly,” said Bruce Tuchman, senior vice president for investments at the Tuchman-Beesmer-Quesnel group in Kingston. “But as a person gets older they are not looking to grow their assets but preserve their assets so they can live off investments.”
Older investors have a “shorter term investment horizon,” according to a new handbook for older investors from Wachovia Securities and are often more interested in protecting accrued capital than generating returns on investment. Some investments, “growth vehicles” with greater return possibilities are also more subject to losses and might not be a wise investment for an investor seeking to protect wealth.
Additionally liquidity is often more important to senior citizens, who may encounter an emergency or some change of life situation that requires access to cash in relatively rapid fashion. So in creating a new portfolio, investors should look at possible penalties and fees that may be imposed if an investment is liquidated within certain time frames.
And don”™t forget to account for fees. Moving money from one firm to another via a mutual fund to another involves complexities and costs that may not be immediately apparent, including the possibility that the new firm may not be able to hold your fund. Choices than include liquidating the mutual fund assets, or paying fees to your former firm to continue holding the fund, fees which could rapidly accrue.
Fees and other costs may be unavoidable but that does not mean they should be a surprise. When making investment decisions, closely question your financial advisor about any possible fees or other costs connected with doing business.
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Do you need income from your investment portfolio? The question is pertinent now perhaps more than ever and so purchases and sales should be made with that need always kept forefront, to avoid situations where the new investment degrades one”™s finances or locks up resources in ways that cannot quickly be turned to cash flow.
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Is fraud a concern? “Sadly, older people are common targets of fraud and financial crimes,” reads the Wachovia guide. In fact the bulk of the guide offers tips for detecting and avoiding fraud.
The elderly are tempting to scammers the same way banks are a lure for hold up men, because that is where the money is. Seniors have often accrued wealth through their working life and are looking to make wise decisions with it, but can fall prey to schemes that leave them worse off.
Typical approach routes these days are “pop-up ads” on the internet, phone calls, emails and personal appeals. A scammer is most likely to try for a fraudulent score during the day when elderly people are often alone and may play on the loneliness of some aged people by “befriending” a senior citizen they intend to swindle.
Invitations to invest in coins, oil and gas exploration, and prize and sweepstakes frauds are common approaches to elderly investors and crooks often come equipped with authentic looking maps or other documents to scam the unwary investor.
Additionally, a senior citizen may be invited to a luncheon or investment seminar where high pressure tactics may be used to secure signatures on unwise investments.
Close cousins of the fraudster are those who engage in high-pressure sales tactics or even scare tactics. If it sounds too good to be true, it is, and if a “financial adviser” is threatening any sort of dire consequence as a result of declining to do business, contact with that adviser should be discontinued and the adviser reported to authorities.
Playing on fear more discreetly is another tactic, with unscrupulous fraudsters playing on the anxiety of seniors to separate them from their funds. Information may harp only on return without and mention of risk and may contain a “limited time” flag that seeks to further pressure any would-be investor.
